Fok Lai Lor Nora v. Fok Ying Tung Ming Yuan Development Co Ltd

HCMP 974/2017

[2020] HKCFI 1142

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 974 OF 2017

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DECISION ON COSTS

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1.On 4 March 2020 I gave decision in respect of the Plaintiff’s application under section 222 of the Companies Ordinance, Cap 622 (“Ordinance”), to cancel a special resolution approving a reduction of the Defendant’s capital. I rejected the Plaintiff’s application and made an order confirming the special resolution and made a costs order nisi that the Plaintiff pay the Company’s costs with a certificate for two counsel. The Plaintiff seeks to vary the order.

2.The Plaintiff argues that the Company should pay at least part of her costs.  In summary Mr Poon submits that the Company defeated the application by offering in the 2^nd affirmation of Lam Sik Lau an undertaking to create a special reserve, which would cover what Mr Poon argued were non-permanent losses.  The precise wording of the undertaking was not produced until the Company filed its skeleton argument on 16 October 2018, little over a week before the hearing.  Until this late stage the Company had continued to assert that the controversial losses were permanent in character.  Thus, so Mr Poon reasons, the Plaintiff’s application was legitimate when commenced and that until shortly before the hearing the reduction of capital was objectionable.

3.Order 62 rule 3(2) of the Rules of High Court specifies that generally costs follow the event.  Paragraph 62/3/3 of the White Book states that if a defendant is successful he should receive his costs unless there is evidence that:

(1)     The defendant brought about the litigation; or

(2)     has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense; or

(3)     has done some wrongful act in the course of the transaction of which the plaintiff complains.

4.The Plaintiff’s grounds for disputing costs fall broadly within the first of these categories.  It seems to me that Mr Poon’s argument is artificial.  As I explain in the decision [1] in my view the Plaintiff was not motivated by a concern about the prejudice that the reduction might cause to the Company’s creditors, such as they are, or her own economic interests in the Company.  As I state in [39]:

“…. it is clear in my view that they represent no threat to creditor’s interests, particularly given the undertaking offered by the Company, or call into question the integrity of the decision made by the large majority of shareholders, who clearly want the capital reduced.”

The Plaintiff simply disagrees with the way the majority wish the activities of the Company to be managed.  This is evidenced by the fact that not only did Ms Fok at no stage suggest what the Company could do to allay her concerns, but Mr Poon argued in great detail that the special resolution should be set-aside notwithstanding that an undertaking had been offered by the time of the hearing.  I see no reason to think that it would have made any difference if the undertaking had been proffered long before the hearing.  The fact is that the objections that were taken were entirely technical.  The provision of a solvency certificate pursuant to section 207 provided all the protection that was required in this case and the Plaintiff’s application was a waste of time and resources.

5.I, therefore, will dismiss the application to vary the costs order nisi and order that the Plaintiff pay the costs of the application to vary the costs order nisi with a certificate for two counsel (as apparently the Plaintiff thought this was necessary) such costs to be taxed if not agreed.

Mr Winston Poon SC and Ms Janet Ho, instructed by      Gibson, Dunn & Crutcher, for the plaintiff

Mr Edward Chan SC and Mr Paul H M Leung, instructed by     Cheng, Yeung & Co, for the defendant